BNB Chain’s native token, BNB, has seen a notable decline, dropping 16.1% between August 23 and September 2. The price fell from $598.80 to a low of $502.10 before recovering slightly to trade at $517. Concerns are rising among investors that BNB may have entered a bearish market, as the token has struggled to stay above $610 since mid-June.
Declining BNB Chain Activity Raises Concerns
Key metrics on the BNB Chain indicate decreasing interest, particularly in decentralized exchange (DEX) volumes. This has led traders to question whether BNB could retest the $400 level seen on August 5. Some market participants believe that BNB’s price could only break out of its current consolidation pattern after the release of its co-founder and former CEO, Changpeng “CZ” Zhao, from detention in the United States.
Source: Degen.eth
Although there is no direct link between CZ and BNB’s price, his strong presence in the market could potentially influence investor sentiment. However, relying solely on CZ’s release to drive a price surge is considered risky, especially given the recent drop in BNB Chain activity.
BNB Chain’s Decreasing Market Share
Despite its recent performance, BNB remains the third-largest cryptocurrency by market capitalization, excluding stablecoins, valued at $75.7 billion. However, the network’s total value locked (TVL) recently dropped to its lowest level since February 2021, suggesting that investors are finding better opportunities elsewhere. Notably, the total cryptocurrency TVL has grown by 27% year-to-date in 2024.
BNB Chain TVL in BNB terms. Source: DefiLlama
In contrast, Ethereum’s TVL increased by 7%, and Solana’s rose by 28% during the same period. BNB Chain appears to be losing ground in decentralized applications (DApps), particularly in DEX activity. DefiLlama data shows a 24% decline in BNB Chain’s DEX volumes in the seven days leading up to September 2, significantly underperforming Ethereum, which saw only a 4% drop. Additionally, active addresses engaging with BNB Chain smart contracts decreased by 18%, compared to a 5% decline on Ethereum.
A Cautious Outlook for BNB
The recent downtrend in BNB’s price seems to be linked to declining activity and deposits on the BNB Chain. While the excitement surrounding CZ’s release could provide a temporary price boost, there appears to be little fundamental reason to be bullish on BNB in the short term.
